{"ok":true,"canonical_url":"https://dealroom.so/glossary/existing-lawsuit","api_url":"https://dealroom.so/api/public/glossary/existing-lawsuit","data_freshness":{"sba_records_through":"2026-05-31","fdic_records_through":"2026-03-31","dealroom_last_updated":"2026-06-15","timezone":"America/Chicago"},"source_summary":["Public SBA 7(a) loan records","FDIC institution data","DealRoom lender and franchise enrichment"],"term":{"slug":"existing-lawsuit","term":"Existing Lawsuit","group":"People and paperwork","definition":"This refers to any pending legal action against the business you're buying. An existing lawsuit can pose a significant financial risk and impact the deal's viability.","what_it_means":"During due diligence, you must uncover any existing lawsuits involving the business, its owners, or key employees. A lawsuit, especially one with potential for significant damages or reputational harm, can be a material liability. Your attorney needs to assess the merits, potential costs, and impact on the business. It may require an escrow or holdback from the seller, or even renegotiation of the purchase price.","url":"https://dealroom.so/glossary/existing-lawsuit","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"product-liability-lawsuit","term":"Product Liability Lawsuit","url":"https://dealroom.so/glossary/product-liability-lawsuit"},{"slug":"material-liability","term":"Material Liability","url":"https://dealroom.so/glossary/material-liability"},{"slug":"due-diligence","term":"Due diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"liability","term":"Liability","url":"https://dealroom.so/glossary/liability"}],"related_questions":[{"question":"Could an existing lawsuit against the business I am buying kill my SBA 7(a) loan approval?","url":"https://dealroom.so/sba-7a/questions/could-an-existing-lawsuit-against-the-business-i-am-buying-kill-my-sba-7-a-loan-approval"},{"question":"Can an existing lawsuit against the business a borrower is buying kill their SBA 7(a) loan approval?","url":"https://dealroom.so/for-lenders/questions/can-an-existing-lawsuit-against-the-business-a-borrower-is-buying-kill-their-sba-7-a-loan-"},{"question":"What if the business I'm buying has existing legal disputes or pending lawsuits?","url":"https://dealroom.so/sba-loans/basics/what-if-the-business-i-m-buying-has-existing-legal-disputes-or-pending-lawsuits"},{"question":"Does a pending civil lawsuit against me personally affect SBA 7(a) loan approval?","url":"https://dealroom.so/sba-7a/questions/does-a-pending-civil-lawsuit-against-me-personally-affect-sba-7-a-loan-approval"},{"question":"Will a past civil lawsuit settlement (not bankruptcy) affect my SBA 7(a) loan eligibility?","url":"https://dealroom.so/sba-7a/questions/will-a-past-civil-lawsuit-settlement-not-bankruptcy-affect-my-sba-7-a-loan-eligibility"},{"question":"If the business I'm buying has existing legal disputes or pending lawsuits, how does that affect an SBA 7(a) loan?","url":"https://dealroom.so/sba-loans/basics/if-the-business-i-m-buying-has-existing-legal-disputes-or-pending-lawsuits-how-does-that-a"}]},"caveats":["Definitions represent DealRoom's plain-English interpretation for buyers; verify regulatory terms against the official SBA and eCFR sources listed.","Not legal, tax, or financial advice, and not an SBA eligibility determination."],"citation":{"label":"DealRoom.so Glossary — Existing Lawsuit","url":"https://dealroom.so/glossary/existing-lawsuit","source_type":"DealRoom Data"}}